Like many other sectors, the insurance industry has become extremely competitive and overcrowded. Consequently, established companies are finding themselves competing with a growing number of new tech-savvy firms that are using disruptive and innovative strategies to capture market share.
These days, consumers often cannot differentiate between insurers and tend to make their decisions based only on price. Moreover, the rise in popularity of comparison tools enables consumers to quickly identify the insurance company that offers the best package at the lowest price. This drives several insurance companies to focus on the price.
What's more is that the insurance industry is highly regulated, and it is not easy to move quickly. Nevertheless, the consumers are moving at an exceptional pace. In fact, the pace of change is so fast that by the time a company has thought through things, the market might have already moved on.
So how do insurance firms encourage both customers and prospects to look beyond the price tag and stay competitive? Consumers want personalization and want to feel acknowledged by firms. Insurance providers that fail to adapt to upcoming trends run the risk of becoming complacent and losing out market share.
The way forward then is to provide tailored services to groups to improve the overall customer experience. This is where customer segmentation comes in.
What Is Market Segmentation?
Customer segmentation involves dividing customers into groups that have common traits, goals, and needs. This way, businesses can provide tailored services and products to various segments. By developing specialied services and products, a business can cater to the needs of a large number of customers.
Understanding Market Segmentation from the Insurance Perspective
Currently, insurance products are extremely limited. Thus, customers are unable to purchase what they really want. For instance, due to the lack of available options, a teenager might have to purchase travel insurance that covers car rental or lost credit card. Similarly, a healthy young man might be forced into purchasing critical illness insurance that covers over 150 types of illnesses.
In such cases, segmentation could mean insurers underwrite various kinds of coverage and put them online for customers to select as per their requirements. This entails venturing into the world of digital insurance that enables customers to pick the products and coverage they truly need.
How Can Wesurance Help with Segmentation?
The cost of making digital insurance is over $15,000, not including maintenance and any additional IT resources needed for the jobs. Such massive costs will prevent insurers from thinking about market segmentation altogether.
The good news is that Wesurance's DTX technology can significantly reduce the cost by not involving any of the developers needed to make the insurance. Using our digital technology, you can cater to demand more precisely so that your customers are no longer obligated to purchase elements of an insurance package they don't need.
Contact us to learn more about segmentation in the insurance industry.
Wesurance is an insurtech company that builds and implements digital insurance solutions for all insurance businesses. Our cloud-based, AI-based software allows you to access a wider reach of customers, grow your online business, and explore more lucrative business models. Find out more here.